Lok Sabha Passes Banking Laws (Amendment) Bill, 2024: Key Highlights

The Lok Sabha, on Tuesday, passed the Banking Laws (Amendment) Bill, 2024. Among other proposed changes, the bill allows bank account holders to have up to four nominees in their accounts. Finance Minister Nirmala Sitharaman tabled the bill in the Lok Sabha earlier today. The bill was passed in the Lower House of the Parliament with a voice vote.

Banking Laws Amendment Bill 2024: Proposed Changes

Among others, the  Banking Laws (Amendment) Bill, 2024 seeks to transfer unclaimed dividends, shares, and interest or redemption of bonds to the Investor Education and Protection Fund (IEPF), allowing individuals to claim transfers or refunds from the fund, thus safeguarding investors' interests.

"The proposed amendments will strengthen governance in the banking sector and enhance customer convenience with respect to nomination and protection of investors," Sitharaman said while moving the bill.

The bill seeks to improve governance standards, provide consistency in reporting by banks to the Reserve Bank of India, ensure better protection for depositors and investors, improve audit quality in public sector banks, bring customer convenience in respect of nominations and provide an increase in the tenure of the directors in co-operative banks.

Another proposed change relates to redefining 'substantial interest' for directorships, which could increase to Rs 2 crore instead of the current limit of Rs 5 lakh, an amount that was fixed almost six decades ago. 

Banking Laws Amendment Bill 2024: What FM Sitharaman Said

"Since 2014 we have been extremely cautious so that banks remain stable. The intention is to keep our banks safe, stable, healthy, and after 10 years you are seeing the outcome," Sitharaman said. "Indian banks have performed exceptionally well in recent years. Highest-ever net profit of Rs 1.41 lakh crore was achieved in 2023-24 & Rs 85,520 Crore in the first half of 2024-25. Today, all the public sector banks have turned profitable.  As a sector, the profitability of all scheduled commercial banks is the highest in multiple decades, with the Return on Assets at 1.3 per cent and return on equity at 13.8 per cent," Sitharaman said.

(With PTI inputs)